"A bail-out, Mrs Merkel fears, would break the bargain Germany struck in accepting the euro: that the single currency’s members would never jeopardise its stability nor ask Germans to pay for anyone else’s mismanagement. That said, the currency union was hardly an act of martyrdom by Germany. In the past decade its firms have modernised and their workers have accepted miserly pay rises, boosting their competitiveness".
This should leave Germany in a bind because their taxpayers, who have already put up "500 billion euro to shore up their own banks and billions more for companies". This means that Germans would be paying for for the comfort of the Greeks, and they seem to be reluctant to do so because,
"LESS than a year before the euro became the currency of 11 European countries in January 1999, a declaration signed by 155 German-speaking economists called for an “orderly”—ie, long—delay. The prospective euro members, they said, had not yet reduced their debt and deficits to suit a workable monetary union; some were using “creative accounting” to get there, and a casual attitude towards deficits would undermine confidence in the euro’s stability".
Germany is in dire straits compared to the rest of Europe in regards to the expectations surrounding it. Furthermore, Germany's actions in the next few years will heavily influence the structure of the political and economic policies in the European Union. Greece and the other countries will also determine the success of the partnerships as well. Some economists say that Germany can " can contribute to a longer-term solution by stimulating domestic consumption, which would help the Mediterranean miscreants grow out of their problems". However, as we discussed earlier in class, if Greece doesn't have comparative advantage in goods, then how can they grow out of their debt?
Do you think Germany should bailout Greece? How can the economic union in Europe be revolutionized? Do you see Greece as being able to grow out of its debt, or will it default? Should other nations in Europe in the Euro-zone combine money together in order to bail out Greece together rather than relying on one country such as Germany?
I don't think Germany should bailout Greece. Canada isn't giving us stimulus money so why should Germany give Greece any? German taxpayers have been going through their own hard times, by giving 500 billion euro to shore up their own banks. Greece should handle their own problems and not rely on the other nations in the European Union to bail them out from their own poor decisions. If you are helped out every time you are in a recession, you'll never learn and the same business practices will be used, resulting in a continuous cycle of recession and bailouts. Greece most likely won't be able to grow out of its debt and will default. A
ReplyDeleteIf Germany does not bail our Greece anytime soon, I really do not see Greece paying off its debt. I think that if Germany does not offer any assistance to Greece then defaulting on the debt may be the only option. From what we talked about, Greece does not have any major capital that it can rely on to get their economy back to where it was. I really do not think Germany should help because Germany might feel obligated to bailout other countries that use the Euro as well. (A)
ReplyDeleteI agree with Nick and that Greece should handle their own problems. Even if that sounds harsh, Germany really doesn't have the responisibility to bailout Greece. Greece is the one in debt and they are the ones who should handle it. A
ReplyDeleteI do not think Germany should bailout Greece. I say this because they do not want this to become a reoccurring theme. They do not want to be the one's that always have to help bailout a European country that is in trouble. I mean, Germany has their own problems to deal with too, and if they are always bailing other countries out, they might lose track of the issues within their own country and find themselves in a similar predicament as Greece, or any other struggling country. Greece should take care of their own problems because they are the one's responsible for their own poor decisions. If you are bailed out every time you make a mistake, you won't learn from that mistake, as seen by the wall street bailout. Its time for Greece to learn from their mistakes, and if that means defaulting, then so be it. (A)
ReplyDeleteIt is not fair or right to expect Germany alone to bailout Greece if anyone is going to at all. They are all in a UNION, and as such, should be partners. If they decide to help, they help together. That's how it should be. I don't think that Greece will be able to grow out of their debts. They are an island with few exports, an aging population, and little more than tourism and vacationing to offer. I don't think that Germany should bail them out, especially if they joined the union on the condition that they would never be asked to do that. Greece, because of the locational and other situation that they are in, will most likely fall back into debt.
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ReplyDeleteThe blog said I posted a comment on this, but I don't see it up here.
ReplyDeleteI guess I'll repost it.
Basically, what I said was that I agreed with Cierra in that Germany alone shouldn't have to bear the burden of bailing out Greece.
In terms of whether or not Greece should be bailed out at all, it's a tough choice. If Greece defaults, serious damage could be done to the value of the euro, but if Greece is bailed out, other countries who are also in poor states might make a case that they should be bailed out too. If money is given to Greece, it should definitely not be given unconditionally.
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Bailing out greece would create to much of a precedent for other troubled countries. A proposal in that direction would only bring up hopes that would be smashed later when thoery cant match up to reality. Greece needs to find a way out on thier own.
ReplyDeleteIf Germany was rolling in money and could lend Greece some money with no affect on their own country it would be good for the world, but unfortunately it's a dog eat dog world and if Germany gets behind by 'lending' some money, it will be almost impossible for them to recover. I say they should not give money to Greece becasue they honestly can't afford it.
ReplyDeleteWhat Germany decides to do will definately alter the structure of the European Union. I feel like if they help out Greece it will become a closer union but if they dont it will definately weaken the union. Germany is going to have to decide what is more important their economy or Europe's economy as a whole.
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